Term insurance or whole life plan – which one should you buy
Every individual might have a family. Whether you are a bachelorette or a married individual, you might shoulder the financial responsibility of your dependants. While you look after the financial needs of your loved ones when you are alive, have you imagined how their requirements would be taken off in your absence? During such a scenario, a life insurance policy comes into the picture.
A life insurance policy is the financial coverage for the safety of your family members against any contingencies like death, disability, accident, and so on. There are multiple life insurance options like Unit linked Insurance Plan (ULIP), endowment plans, money back plans, and so forth due to the massive penetration of insurance in the Indian markets. Amongst the rest, many people prefer term insurance and whole life plan.
Since term insurance and whole life plan are the two most preferred choices, let’s understand each of them in detail:
What is term insurance plan
As the name suggests, a term plan provides life coverage for a specific period. It provides a death benefit to your beneficiaries to maintain their standard of living in your absence. As a policyholder, you should pay your premiums regularly to continue the policy in the long run. However, if you survive the tenure of the term policy, you won’t receive any survival benefits.
What are whole life plans
A whole life plan covers you for a lifetime. Since a whole life plan offers a death benefit and income benefit, its premium is usually high. It is an excellent choice for people over or above forty years of age. When you are older, you have relatively more responsibility towards your spouse and children. With a whole life plan, you can protect their financial needs for an entire lifetime.
Purchasing any life insurance product is quite easy. Whether you want to buy term insurance or whole life insurance, you should consider your requirements and financial goals. Moreover, the selection between these two life insurance policies depends on certain parameters like your age, income, medical condition, and so on. Therefore, let’s take a look at whether you should buy term insurance or whole life plan:
- Young adults
If you are a 25-year-old individual, you should buy a term insurance policy. When you purchase a term plan at a younger age, you might be less prone to severe medical conditions like cancer, heart attack, stroke, etc. Due to fewer chances of falling ill, your insurer can charge lower premiums.
On the other hand, the chances of falling sick gradually increase as you grow older. The decision of buying a term plan would end up into a costlier affair in the later stage. Many insurance companies may charge a high term insurance premium based on your current health condition. After you cross 40 years, you can convert your term policy into a whole life plan.
- Middle-aged adults
If you are above or over 40 years of age, you should buy a whole life plan or a permanent life insurance plan. However, you should clear all your outstanding loans or debts, should be financially settled, have adequate funds for your child’s high education before purchasing a whole life plan.
To sum up, life insurance policies play a major role in every individual’s life. However, an ideal choice of purchase would be term policies. As a policyholder, you can buy term insurance online directly from your insurer’s website in a single click. An online purchase is convenient, time-saving, and hassle-free.
